Posts in Patents

As an independent inventor, I am greatly concerned about the new proposed Section 112(f) wording related to “functional claiming” that was put forward as part of the fix for patent eligibility law. While the bill is on the back burner for now, lawmakers have stated their desire to revive it. In my mind it is part of a continuing effort to prevent inventors of computer-implemented inventions from experiencing smooth sailing in patent prosecution and patent assertion. A description of what computers do and how they “logically” work has a close relationship with its physical structure. These aspects are closely interwoven and largely equivalent. Executing a computer operation means that physical circuits are activated. A computer operation or function is not a disembodied occurrence. An instruction executed by a computer is a rapid configuration/activation of one or more (usually electrical) circuits.

On February 13, 2020, The Niskanen Center, a center-left think tank, published a piece condemning pro-intellectual property voices for what they consider flawed views on intellectual property. In the article, author Daniel Takash explicitly attacks the “unearned moral high ground,” which supporters of IP supposedly occupy. “Supporters of free markets and property rights,” he proclaims, “must stop thinking of the unauthorized use of ideas … as ‘theft.’” Instead, they must “wholesale reject the notion that patents and copyrights are property.” This position is incredibly naïve and demonstrates a profound ignorance of intellectual property and, quite frankly, innovation in general.

On February 13, the Ninth Circuit heard oral argument in the FTC v. Qualcomm case. Counsel for Qualcomm and the Federal Trade Commission (FTC) argued primarily about whether Qualcomm’s behavior resulted in anticompetitive harm, while the attorney from the Department of Justice, which had been granted five minutes to argue on Qualcomm’s behalf, faced tough questions about claims that the district court’s injunction posed a threat to national security. While the DOJ’s intervention in this case is interesting, the best summation of the argument came from the bench when Judge Stephen Murphy, District Court Judge of the Eastern District of Michigan sitting by designation stated: “Anticompetitive behavior is prohibited under the Sherman Act. Hyper-competitive behavior is not. This case asks us to draw the line between the two.”

This article relates to key practice pointers for making a claim patent-eligible subject matter according to the U.S. Patent and Trademark Office’s (USPTO’s) October 2019 Patent Subject Matter Eligibility Guidance Update (October 2019 PEG Update). The October 2019 PEG Update expands on the January 2019 PEG (Patent Subject Matter Eligibility Guidance). In view of the continued denial of cases involving patent subject matter eligibility, such as Athena Diagnostics, Inc. v. Mayo Collaborative Services, 915 F.3d 743 (Feb. 6, 2019) by the U.S. Supreme Court, patent practitioners and clients alike need to pay more attention to the issued guidance documents and relevant Federal Circuit case law. Accordingly, one needs to have strategies in place for dealing with compliance of patent claims with 35 U.S.C. § 101.

The patent industry is in the doldrums. While the U.S. economy continues to endure historic, sustained growth, the stock market has skyrocketed, and new services, products, and investments launch every year, patents as an asset class have remained relatively flat for years. In the last decade, at best, patents as assets have shown anemic growth and stagnant value creation. While capital for litigation funding is available and overall U.S. patent grants and holdings continue to rise, patent valuations have not. Some blame the America Invents Act (AIA) and court decisions over the past decade as the reason why the market has not thrived. I disagree. Any effects felt from changes in the law are symptoms of much more systematic problems that must be solved first for patents to fulfill their full potential as valuable investment vehicles. These problems—identified below— won’t be solved by rolling back regulations or reversing opinions and artificially increasing the value of unworthy assets.

It’s highly appropriate that the 40th anniversary of the Bayh-Dole Act occurs in a year as politically contentious as that in which it passed. In 1980, many predicted that our best years were behind us and that the United States would soon lose its place as the world’s economic superpower. Experts proclaimed the best remedy was to adopt the “Japan, Inc.” model,  where the government  bureaucracy orchestrated a coalition of dominant companies boldly plotting the future (that idea was particularly popular with many in Washington, D.C.). The patent system was under constant attack for being unfair, the U.S. suffered from double digit unemployment and inflation (dubbed “the misery index”) and energy costs skyrocketed. Congress discovered that despite billions of dollars invested annually in federally funded R&D, few inventions were being brought to the marketplace where they could benefit the American people. It felt like the bottom had fallen out from under the feet of our nation. To remind us how far we’ve come—and prevent us from sliding back into the morass—stakeholders across the innovation spectrum have come together to form Bayh-Dole 40. This coalition of industry, academic, policy organizations, venture capital and others (including IP Watchdog) will host a series of events, briefings, papers and other activities explaining the importance of the incentives and authorities of our intellectual property system as embodied in the Bayh-Dole Act, to our prosperity and continued well being.

If a recent decision denying institution of an inter partes review (IPR) is any indicator, the answer to the titular question seems to be no, the Board does not routinely review a challenged patent’s prosecution history—even when the history includes a prior Board decision construing claim terms at issue in the IPR. In Apple Inc. v. Uniloc 2017 LLC, IPR2019-00753, Paper 7 (PTAB. Sep. 16, 2019), the Board majority denied institution, finding certain claimed subject matter missing from Apple’s prior art—despite the Board’s earlier finding in a prosecution appeal that the very same subject matter was disclosed and obvious based on different prior art. Making the apparent oversight even more remarkable, one member of the Patent Trial and Appeal Board (PTAB) majority had actually authored the earlier prosecution appeal decision.

As an update to my posts from 2017 and 2019, it has now been more than six years since the U.S. Supreme Court’s 2014 Alice Corp. v. CLS Bank decision. Still, the IP bar awaits a clear and reliable test to determine when exactly a software (or computer-implemented) claim is patentable versus being simply an abstract idea “free to all men and reserved exclusively to none.” The USPTO’s Section 101 guidelines interpreting Alice—and the accompanying 46 examples—have not cleared the confusion, and Alice continues to distract the USPTO, courts, and practitioners from focusing properly on Sections 102 (novelty) and 103 (obviousness). The net effects still being increased cost, lower patent quality, lower patent portfolio valuations, wasted patent reform lobbying dollars and, in many instances, the denial of patent protection for worthwhile software inventions.

As anyone who follows the United States Supreme Court knows, the Court has historically been extremely fond of taking important cases with cutting edge issues, only to dodge the real issues and address some insignificant procedural or hyper-technical issue. Such disappointment is all too frequent, so Supreme Court watchers are seldom surprised when the Court passes on an opportunity to breathe clarity into otherwise unsettled waters. But what the Supreme Court did in eBay Inc. v. MercExchange LLC, 547 U.S. 388 (2006) was far more disappointing. In eBay, the Supreme Court decided to throw out longstanding and well-established Federal Circuit jurisprudence and offered little or nothing in its place. The result has been an extraordinary shift in the balance of power between patent owners and infringers.

The U.S. Court of Appeals for the Ninth Circuit is set to hear oral arguments tomorrow in the closely-watched case of FTC v. Qualcomm, which will review the issue of whether Qualcomm is required to license its standard essential patents (SEPs) to modem-chip suppliers, after the district court determined that the company’s “no license, no chips” policy violated U.S. antitrust law. In May 2019, Judge Lucy Koh of the U.S. District Court for the Northern District of California issued a 233-page order finding that Qualcomm had engaged in unlawful licensing practices and ordered in part that Qualcomm “must make exhaustive SEP licenses available to modem-chip suppliers on fair, reasonable, and non-discriminatory (“FRAND”) terms and to submit, as necessary, to arbitral or judicial dispute resolution to determine such terms…[and] submit to compliance and monitoring procedures for a period of seven (7) years.”

In this age of polarization, it’s almost impossible to imagine Congress enacting bipartisan legislation that would benefit businesses, higher education, and consumers alike. But that is exactly what happened 40 years ago, and it is worth remembering. As has been outlined elsewhere on IPWatchdog in 1980, Democrat Senator Bayh and Republican Senator Dole wrote a bill that seemed simple, but changed the face of American innovation. Prior to the Bayh-Dole law, anyone who accepted government funding of their research had to give any resulting patent rights to the government. Superficially, that sounded fair – if taxpayer money paid for research, the taxpayer should get the benefits. But the reality was that no one benefitted. Few companies had any interest in investing the substantial resources necessary to transform an early invention into a product when the underlying patents were held and controlled exclusively by the government. And those inventions that were developed simply sat on the shelf in government offices with no plans to bring them to market. Senators Bayh and Dole recognized this problem and their bill allowed research institutions to keep possession of the patent rights their research produced.

Are you bullish or bearish on the 2020 patent market? That is the question I asked a panel of experts recently. Each of the experts surveyed will participate on the faculty at IPWatchdog CON2020, which will take place in Dallas, TX from March 15-18. All those industry insiders who responded are bullish, which is an interesting change after many years of insiders being bearish, or at best cautiously optimistic. Indeed, the sentiment expressed across the board by experts from both the monetization / licensing world and litigation world is surprising, at least at first glance. And, as you will read below, while at least several people cited the uncertainty around patent eligibility in the United States, there is real optimism because license deals are getting done and policy changes show evolutionary changes in the IP ecosystem.

You come up with a brilliant idea for an invention, pour your heart and soul into reducing it to practice and spend a great deal of time and money to get a patent. You receive the patent registration certificate, frame it and hang it on your wall. You think, “This is great! I’ve got a patent and now no one can copy my invention!” You form a company and start selling your new product online. A few months later, you log on to your Amazon.com account and see that some seller in some far away country is offering your exact product on amazon.com. Now what? This is the all too familiar story clients often face, and the exact situation one of my clients—we’ll call him Bill—brought to me a few months ago. Luckily, Amazon provides weapons for patent owners like Bill to deploy in order to combat patent infringement on Amazon. Amazon’s latest tool offered to its authorized sellers is called the “Neutral Patent Evaluation Process.” In part one of this series of articles, I will outline the preliminary steps I took to initiate Amazon’s “Neutral Patent Evaluation Process.”

On February 5, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in HVLPO2, LLC v. Oxygen Frog, LLC in which the appellate court reversed a decision from the Northern District of Florida to deny a motion for a new trial after a jury verdict found patent claims asserted by HVLPO2 to be invalid for obviousness. HVLPO2 challenged those obviousness findings on motions for judgment as a matter of law (JMOL) and a new trial, both of which the district court denied. The Federal Circuit’s recent decision found that the district court abused its discretion in denying those motions because the court had admitted lay testimony regarding obviousness.

With cannabis now legal in some form across more than 30 states, the cannabis industry is on the rise and expected to achieve a market size of more than $60 billion by the end of 2025. As with any new and growing industry, intellectual property protection will be central to innovation and investment. Several unique challenges emerge at the intersection of cannabis and intellectual property law, the first of which is obtaining protection for a cannabis-related business or invention. Two characteristics of cannabis make intellectual property protection challenging—its status as a Schedule I drug under the Controlled Substances Act and the fact that many cannabis species are naturally-occurring. Applications for cannabis trademarks, for instance, have encountered resistance at the U.S. Patent and Trademark Office (USPTO) due to cannabis’s illegal status under federal law. Unlike trademarks, however, a patent does not require an applicant to show that the product is lawfully used in interstate commerce. Rather, a patent provides the right to exclude others from the invention, and there is nothing unlawful about obtaining such a right.